Flight Blog

 

Before reading this post, you might want to read this previous posting, Cameroon Monkeys & Leaky Windshields, Redux. Today we’re tackling the number one misperception about the airport: the airport receives tax dollars from the City of Springfield. Recently, two more questions have come along:

  1. How can the airport spend money on projects (like the new terminal) while the city of Springfield has a budget shortfall?
  2. Why doesn’t the airport give the city money to help with the city budget?

The answer to these two questions can be summed up in two words: revenue diversion. To explain what this means, let’s start with where our airport’s funding comes from. There are two basic sources:

  • The federal government. The feds send us money through the Federal Aviation Administration (FAA). FAA money comes mainly from fees on airline tickets, aviation fuel and cargo shipments..
  • The rest of the funding comes from revenue that the airport generates. This includes income from fees and rents charged to airlines, restaurants, rental car companies, gift shops, etc. To put in simply: any business that does business at the airport must pay the airport for the privilege of doing so.

That’s it. Our airport doesn’t get a cent of money from the city or state. With the exception of the federal funds, the airport supports itself. In fact, the airport pays the city for the following support services: finance, human resources, legal and purchasing. The cost of these city services is negotiated and must be approved by the FAA. Let’s move on and talk about the strings that are attached to FAA money.

When the airport gets money from the FAA, it agrees to follow FAA spending rules. One rule towers above the rest: all airport generated revenue should be spent at the airport. To spend airport generated money elsewhere, without explicit approval of the FAA, is “revenue diversion.” Under federal law, revenue diversion is illegal. If airport money is diverted, the FAA can withhold all federal funding. That can cause financial havoc. For example: the debt service for our airport’s new terminal is based, in part, on anticipated federal money. If that anticipated money suddenly goes away, the airport could, in a worst case scenario, default on the terminal loan.

So what’s up with this “revenue diversion” idea? Why does the FAA care? The Florida Department of Transportation explains it this way—by the way, “grant,” is one of the bureaucratic terms for “money:”

The intent of federal/state aviation funding is to ensure that the national network of airports is well-functioning, efficient and financially viable. Since the federal and state governments are capable of providing only a fraction of airports’ development needs, airports need to spend all the revenues they generate for the operations and development of the airport to ensure adequate infrastructure investment. The ultimate goal of any airport development grant is to make the airports as self-sustaining as possible and minimize the need for further federal/state assistance. The diversion of airport revenue for non-aviation use limits the effectiveness of grant assistance and jeopardizes the goal of achieving self-sustainability. The main rationale for the revenue retention provision is the intent of government to ensure an effective, efficient and safe aviation system. The state and federal contributions to this goal can only be maximized when local aviation-related funds are solely used to achieve the same purpose.

Let’s put all this in the perspective of the current economy and the declining revenues faced by many cities.  In 2008, a legal digest, written by the Airport Cooperative Research Program (ACRP), said this about airport revenue diversion:

The fiscal problems facing municipal governments more generally (including infrastructure needs and such operating costs as fire and police protection), coupled with a declining tax base, have forced many to search for new sources of revenue. Congress has stepped in and enacted laws to circumscribe the ability of federally funded airports to support local governments generally. Unlawful revenue diversion is the use of airport revenue for other than airport purposes.

The digest continues:

It is understandable that financially strapped local governments look to airports as “cash cows.” Indirect taxes can be levied upon airlines and passengers who may have no vote in the local jurisdiction; hence there will be no political price for the local politician to pay for imposing unjust fees upon them for services they do not receive. Indeed, the local politician can be viewed as a hero among his constituents, who enjoy enhanced governmental services with no corresponding local financial burden.

Note this point in the above paragraph: “Indirect taxes can be levied upon airlines and passengers…"

Here’s what the ACRP legal digest says on this point:

Airlines and aircraft operators, as well as airport concessionaires, have objected to diversion on grounds that if airport revenue is spent on non-aviation uses, they will be forced to shoulder the economic burden thereby created. Airports account for between 4 percent and 6 percent of airline industry costs, and a diversion of revenue could, according to the airlines, only worsen the airlines’ financial condition, which, since deregulation, has fallen to historic lows… The airlines are concerned that spending airport revenue on non-airport services results in increased rents, fees, and charges to airlines exceeding the cost of airport capital and operating expenses.

In other words, airlines don’t like revenue diversion. If a city diverts airport revenue, it could end-up forcing some airlines to leave town.

If all this makes your head hurt, well, it’s understandable. Please bear with us for one more point.

When a city owned airport accepts money from the FAA, it’s actually the city that’s accepting the money. In the jargon of the business, the city is the airport “sponsor.” When the money is accepted, there is a “binding obligation between the airport sponsor and the federal government.” That’s according to the ACRP legal digest. If a sponsor diverts money from its airport, the feds can, and will, drop the hammer. Here’s how the Florida Department of Transportation explains it:wingsdollars

Federal transportation officials can also withhold general transportation funds from any local government that diverts revenue generated by a public airport. Under 49 USC §47107, the U.S. Secretary of Transportation “may withhold any amount from funds that would otherwise be made available to the sponsor, including funds that would otherwise be made available to a State, municipality or political subdivision thereof (including any multimodal transportation agency or transit authority of which the sponsor is a member entity) as part of an apportionment or grant if the sponsor fails to reimburse the airport for unlawfully diverted revenue.” This means that the U.S. Secretary of Transportation has the authority to withhold not only aviation, but also transit and rail funds from local governments that fail to reimburse airports for illegally diverted funds.

There you have it. Now you know why the airport can spend money on its own projects while the city of Springfield has a budget shortfall, and why the airport can’t give the city money to help with the city budget.

Read about the most infamous case of revenue diversion by clicking here. Here's a link to another well known case.

 

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About three years ago this blog ran a series of postings about the biggest misperceptions people have about the airport. It’s time to dust those postings off, tweak, and repost. 

Why? Because the Misinformation Monsters have been out in full force the past week — particularly the nameless critics that the Springfield News-Leader feeds and nurtures at the bottom of its web pages. 

British novelist Samuel Richardson said something that sums up many airport critics, and we're paraphrasing here,  ‘People with bad information, and therefore little understanding, are most apt to be angry.’
 

 

We get all sorts of questions and comments from the public. Here’s a sampling:

  • I am having a monkey flown in from Cameroon, what is expected of me?
  • Our flight was canceled because the gasket around the windshield of the plane leaked. Why wasn’t this fixed the night before?
  • There was no signage telling us where to turn off for the airport from highway 65…
  • We want to import dogs from Lebanon (the country) to USA through your airport. Please inform us of the requirements to allow the dogs, coming from Lebanon, to enter to USA.
  • I am interested in studying to become a flight attendant. Please send any information to my home or email address.
  • Does the Springfield Airport fly into Lafayette, Indiana? (To this question you can add the following cities: Little Rock; Flagstaff; Hartford; Centralia, Illinois; Muncie; and Eau Claire, Wisconsin. Then there’s the more obvious wish list: Kansas City, Houston, New York City, and Washington D.C.)
  • I wanted to know if you have a heated/cooled cargo hold?

Don’t get me wrong—I’m not making fun. At first blush some of these questions do seem silly, but they all have a common need: customer service. They want and need good information. That’s what people yearn for. When they can’t get it from the airlines, they end up asking the airport. And in many people’s minds there is no distinction between the airport, the airlines, the highway department and the U.S. Department of Agriculture. We’re all just one big ball of wax.

We can deal with it most of the time, but it does get frustrating--especially so with those who don't have a need, they're just mad.

Take the lady who took pleasure in berating the airport because the airlines don’t keep flight information up-to-date. Her email cackled, “One more black eye for the Springfield Branson Airport!” Ouch--didn’t even know we had ONE!

Then there was the nameless News-Leader expert who declared the airport is losing commercial air service. He knew this because his, “Office in on the flight path and we see every aircraft that lands & takes off. 75% of the time, we see military cargo aircraft shooting take offs & landings, NOT commercial carriers."

Ouch--who needs facts? Never mind that our airport was the only airport in the region last year to have positive passenger growth--up four percent. But here’s the real kicker--airplanes landing and taking off in Springfield can do so from four different directions. That means the critic’s office is located in only one of four flight paths…

In the next few days I’ll be blogging about the biggest and most common airport misperceptions:

  1. The airport receives tax dollars from the City of Springfield.
  2. The airport controls and sets ticket prices.
  3. The airport has only to snap its fingers and the airlines will appear and fly wherever we want (get out that wish list)!
  4. The new terminal wasn’t needed, is a huge waste of tax money.
  5. The airport is too small to land “big” airplanes.

This is not an exercise meant to berate or insult. It’s meant to inform. Remember what Sam Richardson said.

 

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Apr 19 2010 Not Us! Not Us! BY adminTAGS Customer Service

 

Word comes this morning that five Airlines have promised they won't charge customers for carry-on bags. That's according to U.S. Senator Charles Schumer.

Schumer took the entire airline industry to task last week after Spirit Airlines announced a plan to charge $45 per carry-on.  The senator threatened to unleash the U.S. Treasury Department on airlines, using the unique argument that charging bag fees is tax evasion. Apparently some airlines don't like the sound of that!

Read more from Reuters, via the New York Times.

 

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By now we assume that anyone with a passing interest in air travel has heard about the havoc created in Europe by the volcanic eruptions in Iceland. The New York Times has some good advice on how to adjust your European travel plans.

 

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Mark emails us with these thoughts:

"I have a company in the area that has clients who regularly fly to Branson/Springfield area.  I am struggling with your website, because I cannot find out on what day what flights come in and out of the airport.  With this information I would be better able to help assist my clients on what days to travel from what cities.  On another note, has there ever been talk about adding a direct flight to the northeast such as Philadelphia, Newark or Washington/Baltimore?  Many of our clients fly to and from this area of the country and I assume that a sizeable number of people fly to the northeast since it is such a hub of population."

Mark...  We've have found that trying to publish a dependable airline schedule is like trying to nail jello to a wall. That's because airlines are continually adjusting schedules. We have also found that few people have the expectation of seeing a published schedule. When they want to travel they typically go to an airline or travel web site. They input where they want to go and when. They are then offered choices and they choose. In this day and age very few people begin the travel itinerary process by wanting to see a schedule.

We can make the general statement that the service offered from Springfield by Delta, American and United is daily service. In other words, each of these airlines fly to their Springfield destinations daily. On the other hand, Allegiant airlines typically flies to each of its Springfield destinations several times a week. You can find airline and destination information here.

As for you thoughts about service to the Northeast...

It's a matter of the airlines deciding they want to fly directly from Springfield to a Northeast city. The current state of the airline industry works against us in this regard. Here are a couple of the factors:

  • For the past ten years the airlines have mostly served small market airports, like Springfield, with regional jets. These are small jets that typically carry fifty people. The economics of flying regional jets doesn't usually allow for a flight any longer than 600 miles. After 600 miles regional jets start to loose money in a hurry. The distance from Springfield to NYC is 1067 nautical miles.
  • Springfield is a small air market. From the airline perspective there isn't enough demand in Springfield to justify service to any one NE city. So what do airlines do? They collect passengers from small markets, like Springfield, and fly them to large hub airports. At the hub, small market passengers are, in effect, collected and deposited on bigger airplanes and flown to NE destinations. Most travel to the NE, from Springfield, is done through the hub airports in Chicago, Memphis, Dallas, or Atlanta. This is called the "hub and spoke system." Our airport is a spoke.

Bottom line: from the airline perspective we have service to the Northeast. We just have to connect through a hub to get there.

 

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